Greek 2011 budget deficit widens despite new taxes

ATHENS (Reuters) - Greece's budget deficit widened last year despite the government's hopes to raise extra revenues from emergency taxes to make up for a recession worsened by tough austerity measures.

The central government budget gap, which excludes several large items such as local authorities finances, widened 0.8 percent year-on-year to 21.64 billion euros ($27.45 billion), according to figures from the finance ministry on Thursday.

The figures are indicative for the general government shortfall, the benchmark for the EU's assessment of Greece's economic policy program.

The gap was slightly lower than the deficit target of 21.7 billion.

Debt-laden Greece has consistently missed the deficit targets set by its international lenders under a bailout plan agreed in 2010, partly due to a deeper-than-expected recession but also because of its own failure to quickly implement reforms and crack down on tax evasion.

The economy is seen shrinking by 5.5 percent in 2011, its fourth consecutive year of recession. Under the 2012 budget plan, the deficit is expected to narrow by more than 9.0 percent of GDP last year from 10.6 percent in 2010.

Greece imposed a string of emergency taxes in September after its lenders threatened to withhold bailout funds if it did not meet its budget goals, a move that would have effectively rendered the country bankrupt.

The new taxes included a charge of up to 5 percent on gross personal income as well as a controversial property tax which households must pay or face having their electricity cut off.

These measures have failed to boost net revenues, which shrank by 1.7 percent year-on-year last year, due to delays in collecting tax revenues after a tax officers strike late in December, the ministry said.

Recession is dealing a further blow to the budget as the government steps up grants to its ailing pension funds, whose revenues are drying up. Spending before interest payments dropped by 1.3 percent last year.